HC2121 Comparative Business Ethics and Social Responsibility

Questions:

Topic:

Complete a case study report based on the case Case 4 Sustainability Challenges in the Gas and Oil Industry found in the 11^th edition of the prescribed Business Ethics text book by Ferrell.

1. Sections : Introduction
2. Section  : Main body of the report consisting the 3 questions at the end of case study
3. Sections : Conclusions

Answers:

Section-1

Introduction

Section-2

There are lot of risk that are associated with the drilling and the transportation process of the oil and natural gas. The pollutions and the emission related hazard that the industry is facing are separate aspect from the disaster related hazards. Some of the hazards are like gas release and the explosion of the released gas, massive fire caused by the ignition of the hydrocarbon that accidentally released, and the potential harmful effect of the release of oil on the sea and sensitive costal area (Aven et al., 2007). The impact of this kind of disaster is high for the business as well as for the environment and the society. The accident impacts the health and safety of the staffs of the organisation and some time that result in loss of life. From the case it can be seen that BP accidents killed 15 and 11 staffs of the organisation in the two accidents. The financial impacts that BP had to to incur in the 2010’s accident are $36.5 bn for the cleanup and $18.7 bn for the environmental damage (Gill et al., 2012).  Similarly Exxon had to spend greater than $2.2 bn for the reimbursement and cleanup activity. The disasters also impacted the environment of the area with huge amount of livelihood loss for the local population. Several special of animal died in large number because of the oil spill on the sea and accumulation over sea ground level.

There are risk factors that cause this kind of accident. Management of those risks if is done ethically reduces the change of the accident. The result would the avoidance of the huge financial loss and loss of organisations’ image. The management of the risk stars with the assessment and identification of the risk factor in the daily operation of the industry (Hoffman, 2002). Then the organisation would develop objectives of reducing that risk through control and operational process development. From the given case of BP and Exxon it is quite visible that the risks are not managed ethically in both cases to avoid the risk. Even after the accident took place the contingency plan and response method was grossly inappropriate (Aven et al., 2007). The result is the huge damage to the company as well as to the local environment.  

The energy supply demand and the risk faced by the Exxon, BP or the Fracking industry

The management of risk and the role of the ethical leadership in the sector

Section-3

Conclusion

Risk is part of the oil and gas industry. There is always a possibility of big disaster in the operation of the industry. New industry like the hydraulic fracturing would also have some risk factor which are not so pronounced in the present time and may image in future. That is why a constant check in this regard would make the industry as a whole to avoid such disastrous situation. The accident not only impact the organisation financially but also the corporate image of the organisation. There a constant vigilant would help the organisation to reduce the risk factor. The culture of the organisation depends on the leadership of the organisation. There an ethical approach to the leadership is essential in the management of the risk. The current situation of the industry is tight as the demand in the market is high, the price level of the crude is low and new sources are harder to find and explore. There the risk taking ability of the organisational leadership increases and there the preventive measure and the disaster contingency plan may get low priority. Under such condition the chance of accident increases. There the leadership becomes the important factor in the management of the risk.

References

Aven, T., Vinnem, J. E., and Wiencke, H. S. (2007). A decision framework for risk management, with application to the offshore oil and gas industry. Reliability Engineering & System Safety, 92(4), 433-448.

Hoffman, D. G. (2002). Managing operational risk: 20 firmwide best practice strategies (Vol. 109). John Wiley & Sons.

Howarth, R. W., Ingraffea, A., and Engelder, T. (2011). Natural gas: Should fracking stop?. Nature, 477(7364), 271-275.

Stevens, P. (2012). The ‘shale gas revolution’: Developments and changes. Chatham House, 2-3.

Walumbwa, F. O., and Schaubroeck, J. (2009). Leader personality traits and employee voice behavior: mediating roles of ethical leadership and work group psychological safety. Journal of Applied Psychology, 94(5), 1275.